Small businesses in China capitalising on e-commerce boom

July 17, 2017

Small and medium-sized enterprises in China are capitalising on the e-commerce boom to restructure the way business is done. Online sales of consumer goods in China soared 26.2 per cent from the previous year to 5.16 trillion yuan in 2016. Ministry of Commerce has forecast strong growth in consumption in 2017 with deepening supply-side structural reform.

"The Internet should empower SMEs in the industrial chain," said Jack Ma, chairman of China's e-commerce giant Alibaba at a meeting in Hangzhou, according to a Chinese news agency report.

Besides being a platform for millions of buyers and sellers, Alibaba has initiated a Tao factory programme to pair up business partners, the report said. Tao Factory has amassed 10,000 factories and promoted custom designs. Most of factories are based in manufacturing strongholds such as Guangdong, Zhejiang and Fujian provinces, said Yuan Wei, head of Tao Factory, the report said.

Factories put up details of products online, including size, technological standard, quality and samples. They also register details that attest to their credit. "Tao Factory focuses on improving efficiency on the production side, through partnering up Internet sellers and SMEs," Yuan was quoted as saying.

Chuansheng Knitting, based in Dongguan, Guangdong Province, used to churn out sweaters and other garments. Now about 80 per cent of their business comes from online sellers, according to the report. "Under the traditional mode, it took us a long time to get payment, which frequently affected our capital chain. Now we cater our production according to different clients and different orders," said manager Li Bing.

Most of the orders are not large volumes, but clients require goods to be ready in short notice, and profits are usually very high, Li said. "We recently had an order of 100 pieces, and they had to be ready in a week. The profit per piece was 2,000 yuan ($ 295)," said Li.

Tao Factory works well for traditional manufacturers like the garment industry, Yuan said. "Factories may have large inventory, but on the other side, certain demands are really high. Based on big data, demand in a certain period of time can be calculated, and we can give advice to buyers and sellers. We also offer information on designers and raw materials for the factories," said Yuan. "Integrating online and offline business is the future," he said.

Guangzhou Blue Leaves Garment Factory used to supply for wholesalers in nearby cities. "A few years back, our salesmen had to go door to door to get orders, now everything relies on the Internet. We even have orders from foreign buyers now," said manager Jiang Zaijian.